This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Goldman, Deutsche Lead Record Apple Debt Offering for Dividend Boost

Updated from 3:15 p.m. ET to include closing Apple share prices and additional data throughout.

NEW YORK ( TheStreet) -- Apple (AAPL) has completed the biggest debt issuance in corporate history, as the iPhone maker uses surging investor demand for high quality debts to dramatically increase its share buyback and become the largest dividend payer in the world.

Apple, on Tuesday, raised $17 billion in debt financing, a record for a non-financial corporate issuer as the company plans to return billions in undistributed cash to shareholders.

The debt will help Apple return money to shareholders without incurring a tax hit for repatriating any of its over $100 billion in overseas cash.

Apple sold $5.5 billion in 10-year notes at a spread of 75 basis points over the Treasury rate, while it will be selling $3 billion in 30-year bonds at a spread of 100 basis points over the Treasury rate on Tuesday, according to Bloomberg data.

Apple also sold $1 billion in three-year floating rate notes, $1.5 billion in three-year fixed rate notes, $2 billion in five-year floating rate notes and $4 billion in five-year fixed rate notes, the data show.

Goldman Sachs (GS) and Deutsche Bank (DB) led Apple's (AAPL) six-part debt offering, which came in six maturities starting in 2016 and ending in 2043.

Spreads on Apple's offering appeared to narrow through Tuesday, given strong demand for the company's debt and initial media reports of higher spreads on Tuesday morning. Media reports indicate demand for Apple's issuance exceeded $50 billion.

Apple shares rose nearly 3% in Tuesday trading to $442.78.

In second-quarter earnings, Apple said it will increase its quarterly dividend by 15% and increase its share buyback authorization by $50 billion to $60 billion.


Earlier in April, David Einhorn of hedge fund Greenlight Capital applauded the iPhone maker's decision to finance the dividend increase and boost to its share buyback authorization, after waging and then withdrawing a battle with the smartphone pioneer to pay out a perpetual preferred stock dividend.

"We applaud Apple's decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago," a Greenlight Capital spokesperson said on behalf of the fund on April 23.

"This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple's management and board in the Company's future."


Greenlight Capital titled its preferred stock proposal iPrefs, however, the hedge fund withdrew a shareholder lawsuit surrounding the payout earlier in 2013.

Apple said in earnings it will increase its quarterly dividend to $3.05 a share as part of a plan to return $100 billion in cash to shareholders by the end of 2015.

The company's dividend yield is about 3% based on Apple's current share price of about $404. Apple's annual dividend payments will be about $11 billion as a result of a 15% increase to its payout.

"Apple is among the largest dividend payers in the world, with annual payments of about $11 billion," the company said of its increased dividend payout.


Apple previously said its bond offering, filed on Tuesday, will be used to pay for the company's increased dividend and its $60 billion share repurchase authorization.

"In conjunction with the expanded return of capital program, the Company plans to borrow and expects to announce more details about this in the near future," Apple said on April 23.

The company's annual dividend payments will be about $11 billion as a result of a 15% increase to its payout, topping Dow stalwarts such as ExxonMobil (XOM) and AT&T (T), according to an April analysis from Moody's.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs